EX-99.1 2 l27117aexv99w1.htm EX-99.1 EX-99.1
 

Exhibit 99.1
(CSB LOGO)
CSB BANCORP, INC. REPORTS INCREASE IN SECOND QUARTER EARNINGS
Second Quarter and Year-to-Date Highlights:
                 
    Three Months Ended     Six Months Ended  
    June 30, 2007     June 30, 2007  
Diluted earnings per share
  $ 0.39     $ 0.72  
Net Income
  $ 956,000     $ 1,771,000  
Return on average common equity
    10.85 %     10.11 %
Return on average assets
    1.17 %     1.10 %
Millersburg, Ohio — July 20, 2007 — CSB Bancorp, Inc. (OTCBB: CSBB.ob) today announced second quarter net income of $956 thousand, or $0.39 per basic and diluted share, as compared to $677 thousand, or $0.27 per basic and diluted share for the same period in 2006.
Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 10.85% and 1.17%, respectively, compared with 7.83% and .85% for the second quarter of 2006.
For the six months ended June 30, 2007, the Company reported net income of $1.77 million, or $0.72 per diluted share, up from $1.45 million, or $0.57 per diluted share in 2006. ROE and ROA for the six-month period were 10.11% and 1.10%, respectively, compared to 8.37% and .92% for the first half of 2006.
“We continue to work diligently at controlling costs, defending our net interest margin and seeking prudent growth in a very competitive market and difficult interest rate environment,” said Eddie Steiner, President and CEO. “Core operating expenses for the quarter, including operation of our new banking center, were .9% below the prior year level. Net interest margin of 4.30% for the quarter declined 12 basis points from second quarter 2006, although net interest income rose slightly due to higher loan volume.”

 


 

Revenue, defined as net interest income on a fully tax-equivalent basis plus non-interest income net of securities transactions, totaled $4.2 million in the second quarter, an increase of $150 thousand or 3.7% over the same period in the prior year. Current quarter revenue includes an insurance recovery of $187 thousand, relating to a claim from a cash shortage irregularity discovered and reported during the second quarter of 2006. Revenue increased 2.1%, or $170 thousand, in the first six months of 2007 to $8.2 million, as compared to $8.0 million during the first half of 2006.
The Company’s second quarter efficiency ratio, defined as operating expenses divided by revenue, was 62.8%, compared to last year’s same period ratio of 71.6%. Net of the prior year irregularity and current year insurance recovery, the efficiency ratio would have been 65.7% in second quarter 2007 versus 65.8% for the second quarter of 2006.
Non-interest expense totaled $2.6 million during the quarter, a decrease of $262 thousand, or 9.0%, from second quarter 2006. For the six months ended June 30, 2007, non-interest expense declined $350 thousand, or 6.2% versus the first six months of 2006. Prior year non-interest expense included a pre-tax charge of $237 thousand from an isolated and nonrecurring cash assets irregularity discovered and reported during the second quarter of 2006. Excluding the 2006 irregularity, non-interest expenses declined $25 thousand, or .9% in the second quarter of 2007 versus the same period in the prior year, and are $113 thousand, or 2.1%, lower for the six months ended June 30, 2007.
Federal income tax expense was $450 thousand for second quarter 2007, compared to $306 thousand for the same quarter in 2006. The effective tax rate for the quarter was 32.0% versus 31.1% in the prior year period. The increase in the effective tax rate was primarily the result of a lesser portion of tax-exempt securities in the Company’s investment portfolio due to a shifting return rate environment over the past year.
Mr. Steiner continued, “Our operating initiatives remain focused on simultaneously improving efficiencies and enhancing services to the markets and patrons we serve. During second quarter, we completely remodeled our South Clay Banking Center to provide full service banking to the entire Millersburg downtown market area and to accommodate the consolidation and closing of the 6 West Jackson Banking Center. We also completed an ATM and Debit Card system change, improving customer funds availability and fraud detection services while providing an updated look to our ATM service. The new Orrville Area Banking Center has been operational for one full quarter and is successfully generating new customer relationships in this growth market for our Company.”
Total assets averaged $327 million during the quarter, an increase of $5.4 million, or 1.7% from the same quarter in the prior year. Average loan balances of $240 million reflect an increase of $14.3 million, or 6.3%, over the prior year second quarter, while average securities balances of $68 million declined $7.6 million, or 10.0% as compared to second quarter 2006. The Company has funded a portion of its loan growth with proceeds from maturities in the investment securities portfolio.

 


 

Average commercial loan balances, including commercial real estate, increased $8.2 million, or 6.2% over the prior year second quarter. Average home mortgage and home equity balances grew $7.6 million, or 9.3% on a comparative quarter basis, while average consumer installment loan and credit card balances declined $1.6 million, or 14.8%.
As of June 30, 2007, nonperforming assets totaled $1.64 million, or .67% of period-end loans and other real estate, compared with $846 thousand, or .37%, at June 30, 2006. Net charge-offs for the quarter totaled $353 thousand, or an annualized rate of .59% of average total loans. For the six months ended June 30, 2007, net charge-offs totaled $383 thousand or .33% of average total loans as compared to net charge-offs of $125 thousand or .11% for the same period during 2006.
The Company’s allowance for loan losses at June 30, 2007 was 1.00% of period end loans and the Company funded $124 thousand in loan loss provision during the second quarter. The ratio of allowance for loan losses to nonperforming loans stood at 153% at June 30, 2007. Commenting on the Company’s credit quality, Mr. Steiner noted, “While loan charge-offs were somewhat higher during second quarter compared to the low levels we experienced in recent prior quarters, there does not appear to be any material elevation in the loan portfolio’s credit risk. We continue to refrain from participating in the sub-prime mortgage arena.”
Average deposit balances increased to $252 million at quarter-end, $7.6 million, or 3.1% above the prior year’s same quarter average. Within the deposit category, time deposits increased $7.4 million, or 6.2% above the average balance of the same quarter in the prior year, while non interest-bearing account balances increased $1.9 million, or 5.0%. Interest-bearing checking, money market and traditional savings average balances declined a combined $1.7 million, or 2.0% from year ago levels.
Shareholders’ equity totaled $35.1 million on June 30, 2007 with 2.5 million common shares outstanding at quarter-end. The Company’s capital position remains strong, with tangible equity to assets at 10.7% on June 30, 2007 as compared to 10.5% at June 30, 2006. The Company declared a common dividend of $0.18 per share during the quarter, a $0.02 increase from the prior-year quarter. Year-to-date dividends declared during 2007 of $0.36 per share represent a 12.5% increase above prior year-to-date dividends.
About CSB Bancorp, Inc.
CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $327 million as of June 30, 2007. CSB provides a complete range of banking and other financial services to consumers and businesses through its wholly owned subsidiary, The Commercial and Savings Bank, with ten banking centers in Holmes, Tuscarawas and Wayne counties and Trust offices in Millersburg and Wooster, Ohio.

 


 

Forward-Looking Statement
This release contains forward-looking statements relating to present or future trends or factors affecting the banking industry, and specifically the financial condition and results of operations, including without limitation, statements relating to the earnings outlook of the Company, as well as its operations, markets and products. Actual results could differ materially from those indicated. Among the important factors that could cause results to differ materially are interest rate changes, softening in the economy, which could materially impact credit quality trends and the ability to generate loans, changes in the mix of the Company’s business, competitive pressures, changes in accounting, tax or regulatory practices or requirements and those risk factors detailed in the Company’s periodic reports and registration statements filed with the Securities and Exchange Commission. The Company undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release.
Contact Information:
Paula J. Meiler, SVP & CFO
330-763-2873
paula.meiler@csb1.com

 


 

CSB BANCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands except per share data)
                                                         
    Quarters   YTD
    2007   2007   2006   2006   2006   2007   2006
EARNINGS   2nd Qtr   1st Qtr   4th Qtr   3rd Qtr   2nd Qtr   6 months   6 months
     
Net interest income FTE (a)
  $ 3,313     $ 3,294     $ 3,354     $ 3,346     $ 3,327     $ 6,608     $ 6,677  
Provision for loan losses
    124       78       80       75       115       202       147  
Other income
    902       646       614       676       732       1,548       1,303  
Other expenses
    2,647       2,619       2,596       2,704       2,908       5,266       5,616  
FTE adjustment (a)
    38       39       48       52       55       77       110  
Net income
    956       815       846       813       677       1,771       1,451  
Diluted EPS
    0.39       0.33       0.34       0.32       0.27       0.72       0.57  
 
                                                       
PERFORMANCE RATIOS
                                                       
Return on average assets (ROA)
    1.17 %     1.02 %     1.05 %     1.01 %     0.85 %     1.10 %     0.92 %
Return on average common equity (ROE)
    10.85 %     9.37 %     9.65 %     9.42 %     7.83 %     10.11 %     8.37 %
Net interest margin FTE (a)
    4.30 %     4.40 %     4.40 %     4.40 %     4.42 %     4.35 %     4.49 %
Efficiency ratio
    62.80 %     66.47 %     65.42 %     67.23 %     71.64 %     64.57 %     70.38 %
Number of full-time equivalent employees
    128       124       126       127       130                  
 
                                                       
MARKET DATA
                                                       
Book value/common share
  $ 14.26     $ 14.18     $ 14.03     $ 13.82     $ 13.41                  
Period-end common share mkt value
    17.75       17.57       19.00       19.00       20.40                  
Market as a % of book
    124.48 %     123.94 %     135.52 %     137.48 %     152.13 %                
PE ratio
    11.38       13.31       13.97       14.84       18.89                  
Cash dividends/common share
  $ 0.18     $ 0.18     $ 0.16     $ 0.16     $ 0.16     $ 0.36     $ 0.32  
Common stock dividend payout ratio
    46.15 %     54.55 %     47.06 %     50.00 %     59.26 %                
Average basic common shares
    2,461,918       2,487,087       2,499,356       2,505,785       2,531,456       2,474,936       2,551,661  
Average diluted common shares
    2,463,240       2,487,087       2,503,056       2,507,934       2,535,021       2,475,000       2,555,449  
Period end common shares outstanding
    2,462,888       2,462,931       2,499,181       2,499,476       2,519,734                  
Common shares repurchased
    43       36,290       295       20,258       47,672       36,333       58,766  
Common stock market capitalization
  $ 43,716     $ 43,274     $ 47,484     $ 47,490     $ 51,403                  
 
                                                       
ASSET QUALITY
                                                       
Gross charge-offs
  $ 379     $ 47     $ 107     $ 23     $ 145     $ 426     $ 180  
Net charge-offs
    353       30       10       5       118       383       125  
Allowance for loan losses
    2,426       2,655       2,607       2,537       2,467                  
Nonperforming assets (NPAs)
    1,635       1,585       1,509       1,471       846                  
Net charge-off/average loans ratio
    0.59 %     0.05 %     0.02 %     0.01 %     0.21 %     0.33 %     0.11 %
Allowance for loan losses/period-end loans
    1.00       1.13       1.12       1.10       1.08                  
NPAs/loans and other real estate
    0.67       0.67       0.65       0.64       0.37                  
Allowance for loan losses/nonperforming loans
    152.99       172.89       172.81       177.26       291.47                  
 
                                                       
CAPITAL & LIQUIDITY
                                                       
Period-end tangible equity to assets
    10.72 %     10.83 %     10.72 %     10.79 %     10.53 %                
Average equity to assets
    10.82       10.91       10.86       10.70       10.79                  
Average equity to loans
    14.72       15.11       15.13       14.97       15.35                  
Average loans to deposits
    95.45       92.12       91.32       93.01       92.57                  
 
                                                       
AVERAGE BALANCES
                                                       
Assets
  $ 326,665     $ 323,327     $ 320,407     $ 320,477     $ 321,299     $ 324,556     $ 319,066  
Earning assets
    308,703       303,899       302,226       301,395       301,956       306,313       299,582  
Loans
    240,208       233,434       230,004       229,042       225,939       236,839       221,300  
Deposits
    251,660       253,398       251,875       246,258       244,082       252,025       246,002  
Shareholders’ equity
    35,348       35,269       34,789       34,298       34,673       35,310       34,976  
 
                                                       
ENDING BALANCES
                                                       
Assets
  $ 327,465     $ 322,358     $ 327,240     $ 320,227     $ 320,899                  
Earning assets
    309,484       305,129       307,682       302,362       300,751                  
Loans
    242,485       235,818       232,432       229,832       228,111                  
Deposits
    250,365       253,531       260,178       249,605       242,823                  
Shareholders’ equity
    35,119       34,915       35,070       34,553       33,799                  
 
NOTES:
(a) — Net Interest income on a fully tax-equivalent (“FTE”) basis restates interest on tax-exempt securities and loans as if such interest were subject to federal income tax at the statutory rate. Net interest income on an FTE basis is not an accounting principle generally accepted in the United States of America.

 


 

CSB BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                 
    June 30,     June 30,  
    2007     2006  
ASSETS
               
Cash and cash equivalents
               
Cash and due from banks
  $ 10,253,372     $ 11,990,923  
Interest-earning deposits in other banks
    136,457       9,964  
Federal funds sold
    0       350,000  
 
           
Total cash and cash equivalents
    10,389,829       12,350,887  
Securities
               
Available-for-sale, at fair-value
    63,757,288       69,256,199  
Restricted stock, at cost
    3,105,900       3,023,800  
 
           
Total securities
    66,863,188       72,279,999  
Loans
    242,484,648       228,110,564  
Less allowance for loan losses
    2,426,110       2,467,284  
 
           
Net loans
    240,058,538       225,643,280  
Loans held for sale
    0       0  
Premises and equipment, net
    7,527,394       7,486,661  
Accrued interest receivable and other assets
    2,626,158       3,137,890  
 
           
 
               
TOTAL ASSETS
  $ 327,465,107     $ 320,898,717  
 
           
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Liabilities
               
Deposits:
               
Nontinterest-bearing
  $ 40,648,183     $ 38,119,508  
Interest-bearing
    209,716,320       204,703,822  
 
           
Total deposits
    250,364,503       242,823,330  
Short-term borrowings
    33,257,047       39,889,842  
Other borrowings
    7,202,919       2,704,998  
Accrued interest payable and other liabilities
    1,521,503       1,681,549  
 
           
Total liabilities
    292,345,972       287,099,719  
 
           
Shareholders’ equity
               
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,667,786 shares
    16,673,667       16,673,667  
Additional paid-in capital
    6,439,015       6,418,965  
Retained earnings
    17,132,359       15,388,867  
Treasury stock at cost — 204,898 shares in 2007 and 148,053 shares in 2006
    (4,348,856 )     (3,275,850 )
Accumulated other comprehensive loss
    (777,050 )     (1,406,651 )
 
           
Total shareholders’ equity
    35,119,135       33,798,998  
 
           
 
               
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 327,465,107     $ 320,898,717  
 
           

 


 

CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                                 
    Quarter ended     Six months  
    June 30,     June 30,  
    2007     2006     2007     2006  
Interest and dividend income:
                               
Loans, including fees
  $ 4,485,314     $ 4,146,970     $ 8,799,834     $ 7,969,475  
Taxable securities
    734,392       759,167       1,484,449       1,536,966  
Nontaxable securities
    66,617       99,693       135,129       201,516  
Other
    2,186       247       15,380       6,839  
 
                       
Total interest and dividend income
    5,288,509       5,006,077       10,434,792       9,714,796  
Interest expense:
                               
Deposits
    1,600,736       1,272,915       3,154,099       2,439,835  
Other
    412,420       460,229       750,048       707,755  
 
                       
Total interest expense
    2,013,156       1,733,144       3,904,147       3,147,590  
 
                               
Net interest income
    3,275,353       3,272,933       6,530,645       6,567,206  
Provision for loan losses
    124,271       114,667       202,276       146,667  
 
                       
Net interest income after provision for loan losses
    3,151,082       3,158,266       6,328,369       6,420,539  
 
                       
Non-interest income
                               
Service charges on deposits accounts
    316,887       337,640       592,359       652,726  
Trust services
    186,638       164,348       356,275       256,590  
Securities gains
    5,430               5,430          
Other
    392,937       230,218       593,929       393,333  
 
                       
Total non-interest income
    901,892       732,206       1,547,993       1,302,649  
Non-interest expenses
                               
Salaries and employee benefits
    1,434,823       1,435,548       2,842,003       2,921,503  
Occupancy expense
    181,720       167,530       366,273       338,743  
Equipment expense
    125,214       121,377       241,132       257,513  
Franchise tax expense
    104,741       112,192       206,079       221,392  
Professional and director fees
    164,760       174,431       306,142       348,452  
Other expenses
    635,249       897,041       1,304,754       1,528,326  
 
                       
Total non-interest expenses
    2,646,507       2,908,119       5,266,383       5,615,929  
 
                       
Income before income tax
    1,406,467       982,353       2,609,979       2,107,259  
Federal income tax provision
    450,000       305,700       839,000       656,700  
 
                       
 
                               
Net income
  $ 956,467     $ 676,653     $ 1,770,979     $ 1,450,559  
 
                       
Net income per share
                               
Basic
  $ 0.39     $ 0.27     $ 0.72     $ 0.57  
 
                       
Diluted
  $ 0.39     $ 0.27     $ 0.72     $ 0.57  
Note: Certain prior year balances have been reclassified to conform to the current year presentation.